Population Control for Cars

Hong Kong through the Looking Glass: A Series on Sustainable Planet, People, and Prosperity

 
A few weeks ago I compared Hong Kong’s and Singapore’s (SG’s) drinking water sustainability efforts. Now I’ll begin to do the same for transportation sustainability. This post looks at one way HK and SG try to reduce vehicle traffic volume. In future posts I’ll examine measures that the different locations have (or haven’t) carried out to try to relieve traffic congestion, reduce individual vehicle tailpipe emissions, encourage public transportation use, and support bicycle and pedestrian travel.

Efforts to reduce traffic volume begin with reducing the population of personal automobiles. Both locations attempt to do this by making it very expensive to own and operate a car, primarily by levying high initial registration fees as well as having high fuel taxes/prices. Additionally Singapore imposes high tariffs on cars and its Certificate of Entitlement (COE) program places an absolute cap on the number of vehicles allowed in the nation and limits vehicle population growth to .5 percent per year.

HK’s First Registration Tax (FRT) marginal tax rates start at 40 percent of a car’s market value and can be as high as 115 percent. For a $50,000 (HK $388,000) car the FRT is $33,570 (HK $260,500). Singapore’s Additional Registration Fee (ARF) rates start at 100% and can be as high as 180 percent of car value. For a US $50,000 (S $64,500) car the ARF is US $68,295 (S $88,100). U.S. registration fees are considerably less. HK and SG are near the top of world gasoline prices while the U.S. is near the bottom. Current regular unleaded gasoline prices are around $7.91/gallon (HK $16.19/liter) for Hong Kong, $6.09/gallon (S $2.08/liter) for Singapore, and $3.18 /gallon in the U.S.

Hong Kong does not have an import duty on vehicles. Singapore charges an import excise duty that is 20 percent of a car’s market value. Twice a month Singapore’s COE program makes a limited number of new car purchase rights certificates available by on-line open bid. In the first November 2014 round, successful bidders paid a Quota Price of $50,310 (S $64,900) for the right to purchase a new car with an engine size of 1600CC or less. The Quota Price for cars having larger engines was $54,952 (S $70,890).

 
Economic theory predicts that higher costs result in lower demand and in general that seems to be born out by the facts with respect to the motor vehicle population rates and transportation fuel use (gasoline + diesel) of HK, Singapore, and the U.S., if one takes into account that Singapore’s per capita Gross National Income is roughly 40 percent higher than those of HK and the U.S. Thus Singapore residents can more easily afford more expensive cars and gasoline. In 2011 the number of motor vehicles per 1,000 people was 786 in U.S., 151 in Singapore, and 80 in Hong Kong . The amount of fuel used for transportation per person per year in 2011 measured in kg of oil equivalent (a standardized energy unit) was 1,510 in the U.S, 497 in Singapore, and 244 in Hong Kong.

For the long term, it’s hard to predict if one location’s efforts to limit vehicle population and thus traffic volume will work better than the other’s. Singapore’s automobile fees and duties are higher than HK’s and its COE program is certainly a more explicit control measure. But at least for now, HK’s lower per capita transportation fuel usage and vehicle population rates seem to give it the edge in sustainability. However vehicle population is only one piece of the sustainable transportation puzzle. In my next blog I’ll try to fill in more of the overall picture.